[MELBOURNE] The US and China are battling to project power as they compete to secure critical minerals supply, the new chair of BHP said on Thursday, downplaying any potential for the global miner to be caught between its top customer and the world’s biggest economy.
“You’ve got two very, very powerful nations just flexing their muscles,” Ross McEwan told reporters after BHP’s annual general meeting in Melbourne. “It’s not the first time this has happened.”
He said “critical minerals are becoming a vital thing,” adding, “And I think a business like ours and a country like ours actually just needs to work with all parties.”
US President Donald Trump and Australian Prime Minister Anthony Albanese signed a critical minerals agreement aimed at countering China’s dominance in the sector on Monday.
“I think, it’s a little bit early to actually see the outcomes of what we see as a good meeting between the prime minister of Australia and the president of the United States. But I think it was a very good meeting to start those conversations,” McEwan told shareholders at the annual meeting.
BHP is a major producer of copper, iron ore, steelmaking coal, and soon to be potash, and those markets are its focus rather than niche critical minerals, he added.
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Australia is quite well positioned to support the US as it tries to derisk its critical mineral supply chain, CEO Mike Henry said, after he and two top Rio Tinto executives met with Donald Trump and Interior Secretary Doug Burgum in the Oval Office on Aug 19.
“I was impressed on just how fierce the focus is in the US on getting more … mines and processing facilities up and going,” Henry said.
BHP is looking with partner Rio Tinto to build the Resolution copper mine in Arizona, which would account for a quarter of US demand for the metal.
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“I think we should see (the agreement) as symbolically significant, in that it goes to just how seriously this issue has been put down and the position that Australia can play in supporting the US,” Henry said.
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BHP would be forced to take more “difficult decisions” for its metallurgical coal business in Australia if there were no tax changes to support it, the CEO and chair both said.
BHP last month said it would suspend operations and cut 750 jobs at a Queensland coking coal mine it shares with a unit of Mitsubishi, blaming low prices and high state government royalties that have dented its returns.
“Without change, there’s without doubt going to be more difficult decisions that are going to be made,” Henry said. The business generated a 1 per cent return on capital last year.
Henry has been widely expected to step down in the next year after a typical six-year tenure. On Thursday, he said it was an exciting time to be in the market and he was enjoying the role.
Amid speculation an interloper could crash the planned US$53 billion mega-merger of Teck and Anglo American, BHP’s former takeover target, McEwan said BHP had a watching brief.
“We do keep an eye on what’s going on in the marketplace and opportunities that come up, be they small or large, or just tuck-ins, in which you can use the infrastructure.” REUTERS
